The impact of policy uncertainty and risk taking on the credit resource allocation of urban commercial banks

This paper investigates the impact of policy uncertainty and risk-taking on the credit resource allocation of urban commercial banks, using data from 30 urban commercial banks over the period 2012–2022 as a sample. The empirical results show that policy uncertainty reduces the allocation of credit resources by urban commercial banks; risk-taking is positively correlated with the allocation of credit resources by urban commercial banks; capital adequacy ratio plays an intermediary role in the relationship between risk-taking and credit resource allocation; the impacts of policy uncertainty and risk-taking on credit resource allocation among urban commercial banks with different equity natures exhibit variabilities. Specifically, policy uncertainty has a more pronounced effect on credit resource allocation in urban commercial banks controlled by local governments, whereas risk-taking exerts a more significant influence on credit resource allocation in those controlled by non-local governments; the impact of risk-taking on the allocation of credit resources by urban commercial banks exhibits a threshold effect, showing different characteristics as the size of the bank changes.